Question

Cork Company importsand sells a product produced in Canada. In the summer of 2011, anatural disaster disrupted production, affecting its supply ofproduct. Cork uses the LIFO inventory method. On January 1, 2011,Cork?s inventory records were as follows:

Year purchased

Quantity (units)

Cost per unit

Total cost

2009

2,000

$40

$ 80,000

2010

5,000

$55

275,000

Total

7,000

 

$355,000

 

Through mid December of 2011, purchases were limited to 8,000units, because the cost had increased to $80 per unit. Cork sold14,200 units during 2011 at a price of $98 per unit, whichsignificantly depleted its inventory.

Assume that Cork makes no further purchases during 2011. ComputeCork?s gross profit for 2011.

Answer

 

A.

$ 1,247,000

 

B.

$  428,600

 

C.

$1,036,600

 

D.

$  440,600